TSX moves near all-time high as cannabis and renewables get lift from U.S. blue wave

·3 min read

TORONTO — Canada's main stock index moved to within reach of a record high as cannabis and renewable energy stocks got a lift from Democrats winning control of the U.S. Senate and crude oil closed above US$50 a barrel.

The S&P/TSX composite index ended Wednesday up 145.60 points to 17,828.11. It moved to within 46 points of last February's peak of 17,970.51 in earlier trading.

"We're getting pretty close … but aside from the tech stocks across the board positive for Canada today on all the sectors," said Michael Currie, vice-president and investment adviser at TD Wealth.

"So if the trend continues, it should be hitting a new record any day now."

In New York, the Dow Jones industrial average surged 437.80 points to 30,829.40 after earlier surpassing 31,000. There was anticipation that Democratic control of Congress and the White House will result in increased government spending.

The market slipped a little toward closing after the U.S. Capitol was evacuated following protests in Washington, D.C. The city also imposed a 6 p.m. curfew.

The S&P 500 index was up 21.28 points at 3,748.14 after earlier setting another record high.

Investors have traditionally preferred gridlock -- which would likely limit corporate tax increases -- but they seemed to be OK with the prospect of higher spending and increased interest rates, said Currie.

"Usually when there's that much uncertainty, it's usually negative for the markets but they're definitely taking it as a positive today."

Democratic Senate candidate Raphael Warnock and Jon Ossoff were declared winners in two Georgia races.

The Nasdaq composite lost 78.17 points at 12,740.79 on concerns that the Biden administration might be willing to break up large tech companies.

Canada's tech sector lost 1.8 per cent with Docebo Inc. down 5.4 per cent and Shopify Inc. 2.6 per cent lower.

Health care led the nine major sectors that moved higher on the belief that incoming U.S. President Joe Biden would be more open to legalizing cannabis. It surged 5.9 per cent with shares of Cronos Group Inc. up 14.2 per cent, Aphria Inc. up 11.8 per cent, Canopy Growth Corp. up 11.5 per cent.

Insurance companies and banks pushed the heavyweight financials sector up 1.9 per cent with Sun Life Financial Inc. and Manulife Financial gaining 5.5 and 3.6 per cent, respectively.

"Insurance companies are typically the most sensitive to interest rates so that should be positive for them," said Currie.

Toronto-Dominion Bank was the leading big bank, up 2.8 per cent in heavy trading.

Utilities climbed 1.1 per cent led by Innergex Renewable Energy Inc., Transalta Renewables Inc. and Boralex Inc. on anticipation that Democratic control would be good for companies that are helpful in fighting climate change.

Energy rose as crude oil prices reached its highest level since February, pushing Husky Energy Inc. up 5.1 per cent.

The February crude oil contract was up 70 cents at US$50.63 per barrel and the February natural gas contract was up 1.4 cents at nearly US$2.72 per mmBTU.

Crude prices were helped by lower U.S. inventory levels last week and Saudi Arabia announcing it would cut production by one million barrels per day.

The Canadian dollar traded for 78.83 cents US compared with 78.70 cents US on Tuesday.

Materials increased even as gold prices slipped from a two-month high earlier in the day.

The February gold contract was down US$45.80 at US$1,908.60 an ounce and the March copper contract was up 1.1 cents at US$3.65 a pound.

This report by The Canadian Press was first published Jan. 6, 2021.

Companies in this story: TSX:SHOP, TSX:DCBO, TSX:CRON, TSX:APHA, TSX:WEED, TSX:INE, TSX:RNW, TSX:BLX, TSX:SLF, TSX:MFC, TSX:HSE, TSX:TD, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press